Opinion
H043499
06-27-2018
In re the Marriage of JEAN-MARC EURIN and LAURA SWAN. JEAN-MARC EURIN, Respondent, v. LAURA SWAN, Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 1-11-FL-159667)
Laura Swan appeals the trial court's order denying her request to award temporary spousal support arrears. Swan argues that a previously filed temporary support order should have been interpreted as considering Jean-Marc Eurin's equity compensation (in the form of stock options and restricted stock units) as "commissions and bonuses" such that Swan would be entitled to a percentage thereof. (See In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33 (Smith/Ostler).) Swan argues the trial court incorrectly interpreted the temporary support order as not including equity compensation. For the reasons stated here, we will affirm the trial court's order.
I. TRIAL COURT PROCEEDINGS
A. TEMPORARY SPOUSAL SUPPORT ORDER
Eurin apparently petitioned to dissolve his marriage to Swan in 2011. (The petition is not in the joint appendix on appeal.) Swan filed a request for order that year seeking child support and temporary spousal support. In a declaration accompanying that request Swan sought "temporary guideline spousal support," including "a percentage of any bonuses or stock income [Eurin] receives above his base salary." (Underline and bold omitted.) She repeated the request in her memorandum of points and authorities. In a responsive declaration, Eurin consented to paying temporary guideline support, "including Smith/Ostler bonus income," but requested that the Smith/Ostler order "be made mutual for any additional income received by either party."
The trial court held a hearing in November 2011 on several issues, including temporary spousal support. The court ordered Eurin to pay Swan "guideline spousal support" in an amount based on a DissoMaster report filed by Swan. The amount of Eurin's equity compensation was not listed in the DissoMaster report, and at the hearing the trial court did not rule on the Smith/Ostler issue regarding Eurin's additional income. The only reference to Smith/Ostler at the hearing was a statement by Swan's counsel that she had "requested a Smith Ostler on any money he received over his base salary."
The DissoMaster is a computer program used to calculate support. (In re Marriage of Williams (2007) 150 Cal.App.4th 1221, 1227, fn. 5.)
A month after the hearing, Swan's counsel prepared a form "Findings and Order After Hearing," which was approved by Eurin's counsel and signed by the trial court. An attachment to the findings stated that Eurin would pay Swan a fixed rate in temporary spousal support in 2011 (just over $3,600 per month), which would reduce in 2012. (We refer to the findings and the attachment collectively as the "2011 Order.") The 2011 Order also contained the following Smith/Ostler language: "As and for additional child support and temporary spousal support, [Eurin] shall pay a Smith/Ostler percentage of all commissions and bonuses, over and above his base monthly wages ... in the percentage set forth in the Annual Bonus Wage Table attached to the DissoMaster printout attached hereto." Unlike Swan's original request, the Smith/Ostler language in the 2011 Order does not reference Eurin's equity compensation.
The parties filed multiple stipulations between 2011 and 2014 to modify the amount of temporary spousal support. All were drafted by Swan's counsel, and all included the same Smith/Ostler language as in the 2011 Order. By separate stipulation, in 2014 the parties divided the community property portion of Eurin's equity compensation, specifically, Google restricted stock units (RSU's) and stock options.
B. REQUEST FOR ORDER RE SUPPORT ARREARS
Swan filed a request for order regarding support arrears in 2015, arguing that Eurin owed her a Smith/Ostler percentage of all equity compensation he had earned since the 2011 Order. Swan argued in the accompanying memorandum of points and authorities that Eurin's equity compensation qualified as "bonuses and commissions" under the 2011 Order, meaning that Swan was entitled to a Smith/Ostler percentage of the equity compensation.
At an evidentiary hearing regarding Swan's request, the trial court characterized the dispute as a "mixture ... of contract construction, which is the job of the Court, and also a matter of fact with regard to ... the intent of the parties" when they agreed to language in the 2011 Order. The trial court allowed Swan to call an accountant as an expert regarding "how the terms bonuses and RSUs" are generally used by accountants who prepare spousal support determinations. The expert testified that it was her practice to always include equity compensation when calculating guideline spousal support because restricted stock units and stock options are considered income. She explained that to calculate support she would allocate the equity compensation between community and separate property, and then include only the separate property equity compensation in the guideline spousal support calculation. The expert opined that she had never heard of an opposing spouse arguing that equity compensation should be excluded from a guideline spousal support calculation. The expert acknowledged she was not involved in drafting the 2011 Order.
Both parties also testified. Swan acknowledged that equity compensation was not addressed at the hearing preceding the 2011 Order, but testified that she believed the Smith/Ostler language in the 2011 Order included Eurin's equity compensation. Swan testified that she did not intend to waive the claim by waiting to assert her right to Eurin's equity compensation, and that she believed it would eventually be calculated. Eurin testified that the Smith/Ostler language in the 2011 Order that does not mention equity compensation was the product of a "negotiation between [Eurin's attorney] and [Swan's] attorney." Eurin asserted that his equity compensation was part of his normal compensation package and that he understood the Smith/Ostler language to apply only to bonuses in addition to that normal compensation package. During argument after Eurin's testimony, the trial court summarized its thoughts on the matter: "If the language has been negotiated by counsel and is presented to the Court as having been approved by both counsel, then counsel can, in their language, agree that certain elements are or are not going to be considered. In other words, it was a choice of counsel by their agreement to state whether it's going to say bonuses, commissions, and other compensation including, without limitation, RSU, GSU, stock options. That would be their choice; correct?"
The trial court denied Swan's request for spousal support arrears by written order. The court noted that the Smith/Ostler language in the 2011 Order was drafted by Swan's counsel and that it referred only to bonuses and commissions even though Swan's original request referred to bonuses, commissions, and stock income. The court concluded that the Smith/Ostler language in the 2011 Order was a "stipulation negotiated by the Parties' counsel" that was repeated in several later modifications, and that to interpret " 'bonuses and commissions' to mean 'all additional income, including RSU or other stock income,' would require the Court to re-write the Parties' stipulations." The trial court reasoned that the parties had consistently treated equity compensation and bonuses as separate concepts, noting that despite stipulating in 2014 to divide the community RSU shares, the parties "did not include [Eurin's] stock income in the Smith/Ostler provision" in the 2011 Order or any stipulated modification. The court acknowledged that the child support component of the Smith/Ostler language in the 2011 Order—which was contained in the same paragraph as the temporary spousal support component—would have to be modified because Family Code sections 4053 and 4058 require all income (including equity compensation) to be considered in determining child support. (The court stated: "It appears that at the Settlement Officer Conference in this matter, in June 2015, the Parties have stipulated to such modification.") But the trial court concluded those Family Code sections did not invalidate the parties' agreement in the 2011 Order as to temporary spousal support because the Family Code sections did not apply to temporary spousal support.
II. DISCUSSION
Swan argues that the 2011 Order's Smith/Ostler language unambiguously applies to equity compensation because the term bonus includes stock compensation.
A. APPEALABILITY AND SCOPE OF THE APPEAL
Before addressing the merits of Swan's appeal, we must consider whether the trial court's order is appealable and also explain the scope of this appeal. Swan's notice of appeal states the order is appealable as an order "dispositive of temporary support." (Citing In re Marriage of Van Sickle (1977) 68 Cal.App.3d 728.) In her opening brief, Swan now argues the order is appealable as "a post-judgment order." (Citing Code Civ. Proc., § 904.1, subd. (a)(2).) The parties did not include a judgment in the joint appendix. We obtained a judgment entered on November 18, 2015, and we have augmented the record to include it. But that bifurcated judgment resolved only the parties' status by dissolving the marriage; it expressly reserves jurisdiction "over all other issues" and states that "all present orders remain in effect." The parties have provided no evidence that those other issues have been resolved. As an order pendente lite that conclusively interpreted a temporary support order (In re Marriage of Skelley (1976) 18 Cal.3d 365, 368), we find that the trial court's order is appealable even though it is unclear from the record provided by the parties whether a final judgment has been entered on all disputed issues related to the petition for dissolution.
As for the scope of the appeal, we focus our review on the sole issue presented to the trial court: Did Eurin's equity compensation qualify as "commissions and bonuses" under the 2011 Order such that Eurin owes temporary spousal support arrears? We express no opinion on whether equity compensation might be included in any future temporary spousal support calculation (for instance, in response to a new request for order showing that Eurin's gross income for purposes of guideline support was actually higher than the values submitted in 2011 because of equity compensation). We likewise express no opinion regarding whether Eurin's equity compensation should be included in the calculation of any permanent spousal support obligations because on the record before us no support determination taking the Family Code section 4320 factors into consideration has occurred. Finally, we do not consider Swan's alternative argument—not raised below in her request for order regarding support arrears but discussed at length in her appellate briefing—that she was entitled to equity compensation under the 2011 Order as part of the temporary "guideline spousal support" the trial court ordered that Swan receive at the November 2011 hearing. (In re Marriage of Turkanis and Price (2013) 213 Cal.App.4th 332, 353 [" 'Points not raised in the trial court will not be considered on appeal.' "].)
B. EQUITY COMPENSATION AND THE 2011 ORDER
1. Standard of Review
Based on the testimony it received at the hearing on Swan's request for support arrears, the trial court determined that the Smith/Ostler language in the 2011 Order was the product of negotiation between the parties. Substantial evidence supports the court's conclusion because Eurin testified that the language was the product of a "negotiation between [Eurin's attorney] and [Swan's] attorney." (See Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 771 [factual findings are reviewed for substantial evidence].) We therefore review the Smith/Ostler language according to principles of contract interpretation as an agreement between the parties.
Parol evidence is admissible to interpret a contract when its terms are ambiguous. (Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 624.) Though a contract may appear clear on its face, it is latently ambiguous if parol evidence shows that the contract is reasonably susceptible of two or more interpretations. (Bill Signs Trucking, LLC v. Signs Family Limited Partnership (2007) 157 Cal.App.4th 1515, 1521 (Bill Signs Trucking).) Whether a contract is ambiguous is a question of law we review de novo. If a contract is ambiguous and parol evidence is not in conflict, we also interpret the contract de novo. However, if there is conflicting parol evidence, we uphold the trial court's interpretation if it is supported by substantial evidence. (Ibid.)
2. The 2011 Order is Ambiguous
Each party argues that the Smith/Ostler language unambiguously supports his or her appellate position. On its face, the 2011 Order's use of the phrase "commissions and bonuses" could reflect an intention to exclude equity compensation as a source of income from which Swan was entitled to a Smith/Ostler percentage (i.e., Eurin's position). But we find the Smith/Ostler language ambiguous because it is also susceptible of Swan's interpretation that it does include equity compensation: equity compensation is not expressly excluded from consideration; Swan sought a Smith/Ostler percentage of equity compensation in her request for temporary support; and she testified to her understanding that equity compensation qualified as a type of bonus under the 2011 Order.
3. Substantial Evidence Supports the Trial Court's Conclusion
Having determined that the 2011 Order's Smith/Ostler language is ambiguous, we must determine whether substantial evidence supports the trial court's conclusion that Eurin's equity compensation did not qualify as "commissions and bonuses" under the 2011 Order. Swan's original request sought a Smith/Ostler percentage of "any bonuses or stock income" earned by Eurin. Eurin provided uncontroverted testimony at the 2015 hearing that the Smith/Ostler language in the 2011 Order was the product of a negotiation between his attorney and Swan's attorney. The 2011 Order—drafted by Swan's attorney—refers to "commissions and bonuses" but not to equity compensation. (See Civ. Code, § 1654 ["In cases of uncertainty not removed by the preceding rules [regarding contract interpretation], the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist."].) The four stipulated modifications to spousal support—all drafted by Swan's attorney—also consistently omit any reference to equity compensation. And Swan did not claim entitlement to any percentage of Eurin's equity compensation for several years after the 2011 Order was entered, which would be consistent with the parties having agreed to exclude equity compensation from the 2011 Order. Though Swan testified that she always intended to claim the equity compensation and that she believed it would eventually be calculated, the trial court was entitled to credit her testimony on that point or not. (Gonzales v. Gonzales (1968) 267 Cal.App.2d 428, 432 ["The determination of the credibility of each witness and the weight to be given to his or her testimony is within the exclusive province of the trial judge as the trier of fact."].) The foregoing provides substantial evidence to support the trial court's finding that the parties agreed to exclude equity compensation from the Smith/Ostler language in the 2011 Order.
Swan focuses on evidence which would support a finding that the parties intended equity compensation to be included in the Smith/Ostler calculations, including dictionary definitions of the term bonus; documents she filed in support of her 2011 request for temporary support in which she requested a percentage of any equity compensation Eurin earned; and her expert's testimony about equity compensation generally being considered income for spousal support calculations. But our task is not to reweigh the evidence. The existence of conflicting parol evidence, standing alone, is insufficient to reverse the trial court's interpretation of the 2011 Order. (Bill Signs Trucking, supra, 157 Cal.App.4th at p. 1521 ["If the extrinsic evidence conflicts, we uphold any reasonable construction supported by substantial evidence."].)
Swan cites Family Code sections and cases regarding the income rules that apply to child support orders, noting that all sources of income must be considered when calculating child support and that parties must follow the requirements of Family Code section 4065 if they choose to stipulate to a child support agreement that is below the statutory guideline formula. (Citing Fam. Code, §§ 4055, 4058, 4065; In re Marriage of Alter (2009) 171 Cal.App.4th 718, 731-732 ["The mandatory formula for calculating child support takes into account both parents' 'net monthly disposable income' ... , which is determined based upon the parents' 'annual gross income.' "]; In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 286-288 ["income includes stock options" when calculating child support].) But those Family Code sections do not require temporary spousal support to be calculated using the same formula that applies to child support. And notwithstanding the disparity, substantial evidence supports the trial court's determination that the parties agreed to exclude Eurin's equity compensation from the Smith/Ostler language. That the 2011 Order's Smith/Ostler language excluding equity compensation applied to both child support and temporary spousal support—and therefore erroneously undercounted Eurin's income for purposes of child support—does not compel a conclusion that the temporary spousal support component was improper. The trial court noted that the parties had stipulated to modify child support to cure the legal error. Having done so, there was no requirement to make or assume a corresponding change to the parties' agreement regarding temporary spousal support.
Swan argues that the trial court "erred in focusing on [Eurin's] subjective understanding of the term 'bonus.' " (Bold and capitalization omitted.) Contrary to Swan's argument, the trial court focused not on Eurin's subjective understanding but rather on his uncontroverted testimony that the Smith/Ostler language was the product of a negotiated stipulation between the parties. As the court reasoned at the hearing, if "the language has been negotiated by counsel and is presented to the Court as having been approved by both counsel, then counsel can, in their language, agree that certain elements are or are not going to be considered." Swan did not challenge Eurin's testimony about the agreement, and as we have explained, substantial evidence supports the existence of such an agreement.
The parties discuss In re Marriage of Minkin (2017) 11 Cal.App.5th 939, 948-953 (Minkin), in which the appellate court determined substantial evidence supported the finding that Smith/Ostler language in that stipulated judgment did not include equity compensation. But that case provides no support to either party here because it also involved interpretation of an ambiguous provision based on substantial evidence unique to that case. (See Minkin, at p. 953.)
III. DISPOSITION
The order denying Swan's request for support arrears is affirmed. Eurin is entitled to his costs on appeal.
/s/_________
Grover, J.
WE CONCUR:
/s/_________
Greenwood, P. J. /s/_________
Premo, J.